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Will a digital pound boost Britain’s post-Brexit growth and reclaim London’s status as the European financial hub?
A financial think tank has proposed that the United Kingdom introduce a digital pound in order to boost London’s position as a global trading centre in the aftermath of Brexit. Previously the gravitational hub of Europe’s finance market, London had much of its dominance eroded after Britain’s withdrawal from the European Union was finalised at the end of 2020.
The UK Finance Ministry will now consider plans on how to make the City of London more appealing to foreign traders and draw operation away from Amsterdam, which emerged as the latest EU trading centre after Brexit.
Euroskeptic leaders and London finance veterans have founded CityUnited, a think-tank that proposes proposals for fostering prosperity in an independent Britain. According to CityUnited chairman Daniel Hodson, the Bank of England’s consideration of a central bank digital currency is commendable, but the mechanism should be accelerated.
“The Bank of England is talking about a CBDC but it ought to be a greater priority as this form of technology is the future, and would bring other benefits like real-time regulation to cut costs,” said Hodson.
The progress made by China in launching a CBDC should worry British finance authorities, said Hodson, who warned that such technology could “steal a long march” on the United Kingdom. Hodson said:
“A central bank digital currency (CBDC) should be a fundamental foundation for a competitive City after Brexit, otherwise China will steal a long march on us.”
China’s advance towards issuing its CBDC has seen the issuance of biometric passports connected to digital yuan wallets, as well as several related pilot projects, as the country moves closer to issuing its CBDC. While China is not the first country to issue a CBDC (the Bahamas is the first), the global economic influence of a Chinese CBDC may be much greater.
The digital yuan, which is expected to fuel China’s digital, cashless cities in the immediate future, will also allegedly be used as part of the Beijing Winter Olympic Games in 2022.